Answer: The American Legislative Exchange Council (ALEC), a lobbying group that is active in drafting and advocating controversial state legislation. It’s not just interested in energy: In recent years ALEC has supported Arizona’s restrictive immigration legislation, the “Stand Your Ground” gun laws associated with the shooting death of Trayvon Martin, and voter identification laws proposed in many states. ALEC’s priorities for 2013 [PDF] include making it harder to bring product liability suits against manufacturers of defective products, ending traditional pension plans for public employees, promoting the diversion of public education funds into private schools and online education schemes, and supporting resistance to “Obamacare” health policies.

When it comes to energy, ALEC wants to speed up the permitting process for mines, oil and gas wells, and power plants — and to eliminate all state requirements for the use of renewable energy. The latter goal is packaged as the “Electricity Freedom Act.” In numerous states, ALEC has used studies by Suffolk University’s Beacon Hill Institute (BHI) to claim that the “Electricity Freedom Act” will free ratepayers from the allegedly immense costs and job losses of renewable energy standards.

The ALEC/BHI energy analysis begins with wild overstatement of the costs of wind energy. They develop low-, mid-, and high-cost scenarios, just as if they were doing a reasonable job of reflecting uncertainty. Yet there is more than a decade of data available on actual costs of wind power in the United States — and the ALEC/BHI low-cost estimate is higher than the costs paid in essentially every real-world transaction to date. We added the ALEC cost estimates to a graph of actual wind transactions created by Lawrence Berkeley National Laboratory (see graph below; “PPA” means purchased power agreement). We had to extend the vertical axis upward in order to display ALEC’s astronomical mid- and high-cost estimates.

Click to embiggen.

There are other problems in the ALEC energy analysis. It assumes that expensive backup capacity is always needed, and always runs, when wind energy is used. New transmission capacity to connect renewables to the grid is assumed to be almost as expensive as generation; one of the data sources cited in the ALEC report actually estimates transmission costs at one-fourth the ALEC level. In reality, states with above-average reliance on wind power have below-average electricity rates; this would be impossible if wind power were as expensive as ALEC claims.

Having exaggerated the cost of electricity from renewables, the ALEC studies go on to exaggerate how much will be needed. Their estimates of the expected growth in electricity use per customer are far above those developed by the Energy Information Administration’s Annual Energy Outlook, the widely cited government forecast of near-term energy supply and demand. This inflates the projected per-household costs of renewable energy, and makes it appear unduly difficult to meet demand with increases in renewables and energy efficiency.

The ALEC/BHI economic analysis is equally unsound. BHI uses STAMP, an idiosyncratic model that has never appeared in academic publications, or in work by anyone outside BHI. STAMP is a computable general equilibrium (CGE) model, developed by BHI to analyze tax policy changes. Like most (though not all) CGE models, STAMP assumes that there is automatic full employment for all those who are willing to work. Thus the failure of Keynesian stimulus programs is built in by assumption.

Yet despite the full employment assumption, STAMP routinely reports huge estimated job losses from government policies such as renewable energy standards. This is done by assuming hypersensitivity to tax rates. In STAMP world, higher tax rates lead to higher prices, decreasing demand for goods and hence demand for labor, causing a reduction in wage rates. At lower wage rates, fewer people choose to work; in addition, more people are assumed to migrate out of the area and fewer migrate in. While there is still full employment for all who are willing to work, there are fewer willing workers after a tax increase — allowing STAMP to estimate job losses.

To connect this to the attack on renewable energy, STAMP assumes that an increase in electricity rates is paid by businesses everywhere and passed on to customers in higher prices. So higher electricity rates function as a sales tax, with all the job-destroying effects STAMP always sees in taxes. (If all you have is a hammer … )

University of Arizona economist Alberta Charney has examined STAMP’s findings for her state. Charney compared three models’ analyses of a combined $1 billion increase in state taxes and $1 billion increase in state government spending. The IMPLAN and REMI models, widely used to study employment impacts, both projected that Arizona would gain about 8,000 net new jobs from this package; STAMP estimated a net loss of about 9,000 jobs. Charney attributed this to the biased assumptions underlying STAMP’s treatment of government spending and taxes.

It’s no wonder that ALEC favors BHI’s economic model: STAMP has never seen a government program that it liked or a tax cut that it disliked. Those who want an objective analysis of the costs and benefits of renewable energy, however, will need to look elsewhere.

Why do those at the Breakthrough Institute insist that everyone else besides them who cares about the environment is wrong, wrong, wrong? Their latest, called “The Creative Destruction of Climate Economics,” is a swipe at those misguided souls who think putting a price on carbon emissions would help combat climate change.

Breakthrough, according to its website, aims “to modernize liberal-progressive-green politics” and to accelerate the transition to an “ecologically vibrant” future. It “broke through” into well-funded fame in 2003 with its attack on environmentalists for failing to emphasize the economic concerns of ordinary Americans, such as jobs — thereby alienating the major environmental groups, who had been talking about jobs and the environment for years.

What’s wrong with pricing carbon emissions? This particular breakthrough rests on a mistaken reading of an academic paper in the American Economic Review, the most prestigious outlet for mainstream economics. That paper develops a simplified, abstract model of an economy that generates carbon emissions. Unlike some climate economics models, it assumes that public policy can affect the pace of innovation. Its conclusion, in the authors’ own words, seems quite balanced:

A simple but important implication of our analysis is that optimal environmental regulation should always use both an input tax (“carbon tax”) to control current emissions, and research subsidies or profit taxes to influence the direction of research.

Compared to exclusive reliance on carbon taxes, they continue, “optimal policy relies less on a carbon tax and instead involves direct encouragement to the development of clean technologies.”

Nothing has been creatively destroyed here, except for a lopsided position that calls for carbon taxes to do the whole job alone. And note that we’re talking about a very simple model, not a study of the U.S. economy. Yet the Breakthrough crowd is ready to run with the claim that another shibboleth of environmentalism has been laid low. After dismissive comments about many advocates of carbon pricing — imagine the chutzpah of Paul Krugman, using his reputation as an economist to support price incentives! — they zoom in on Environmental Defense Fund economist Gernot Wagner.

Wagner has, in fact, made some lopsided statements about the possibility of reaching environmental goals through price incentives alone. Ted Nordhaus and Michael Shellenberger, the Breakthrough authors, are right about a couple of specifics in their response to Wagner: Most of the phaseout of leaded gasoline in the 1970s happened before the introduction of a lead emissions trading system; the same was true for the decrease in the price of sulfur dioxide emissions from coal plants in the 1990s, ahead of the introduction of sulfur emissions trading.

Nordhaus and Shellenberger are wrong to conclude from this, however, that price incentives can be ignored. The European Union’s emissions trading system has no effect because the emissions cap is so high and the resulting price is so low — a common defect of recent emissions trading schemes, as it turns out. The early phaseout of lead emissions from gasoline, and of sulfur emissions from power plants, both were driven by old-fashioned “command and control” regulations, a euphemism for “telling polluters to stop polluting.”

What should be done to reduce carbon emissions? Climate change actually is a crisis that demands massive, immediate response. Putting a price on carbon emissions, funding research on clean energy, and adopting traditional controls on the dirtiest technologies all seem entirely compatible. We’ll need all of the above and more, right away, to stand a chance.

What should be said to those, like Gernot Wagner, who may be overly committed to a single policy choice? As long as it’s a desirable policy, as Wagner’s is, let’s congratulate them on advocating it, and urge them to take an even broader view.

It is so important to work together on this, that the help of Nordhaus and Shellenberger should be welcomed — as soon as they achieve one of those breakthroughs that’s normally required in kindergarten, namely learning to “play well with others.”

Does environmental protection destroy jobs? That may be the strongest argument that the pro-pollution lobby has going for it. No one wants to endorse dirty air and water in so many words, but hey, we’re just trying to save jobs at a time when millions are out of work. In one of the latest reincarnations of this idea, the electric utility industry claims [PDF] that regulating the disposal of coal ash could eliminate up to 316,000 jobs.

Ever sensitive to industry’s needs and wishes, Republicans in the House of Representatives have drafted a bill to ban federal regulation of coal ash, H.R. 2273. It’s expected to reach the floor of the House for a vote this week. Lobbyists supporting H.R. 2273 helpfully point out [PDF] that it will stop the destruction of 316,000 jobs.

A quick reality check: Regulating coal ash disposal means using earth-moving equipment, which doesn’t drive itself, constructing new facilities which don’t build themselves, and so on. Close your eyes and try to picture this, and you may see some workers on the premises. Environmental regulation generally creates jobs, including lots of blue-collar jobs in construction and manufacturing.

So it’s not surprising that, in my new report on the impacts of coal ash regulation, I found that it would increase employment by 28,000 jobs. Not only does regulation require coal-burning power plants to hire construction workers and others; additional jobs are created in the industries that produce equipment and supplies, like the earth-moving equipment; and still more jobs are created when those workers spend money on food, housing, and everything else.

Why, then, would anyone imagine that regulations kill jobs? My report also dissects the industry estimate of up to 316,000 jobs lost. More than 50,000 of those jobs are completely unexplained, resulting either from errors or from hidden assumptions that are not discussed in the industry report. Most of the rest — more than 200,000 — come from a wildly exaggerated estimate of the effects of a 1 percent increase in electricity rates. (Utilities would pass on the costs of regulation to their customers whenever possible, giving rise to the rate increase.)

That implausibly supersized response to a small price increase, the basis for the industry’s job loss figure, was based on a single estimate in an unpublished academic paper. The use of that figure ignored the many caveats and qualifications from the paper’s author. One of those caveats, as I explain in my report, could mean that lower employment causes higher electric rates, rather than vice versa.

What happens when you do the analysis correctly? I used the industry’s own estimate of the cost of regulation (from another study by the same consultants who came up with the job-loss estimates). I ran this number through the widely used IMPLAN model of the U.S. economy, which calculates direct, indirect, and induced (even more indirect) job impacts. The result is that the numerous expenditures required by regulation for waste disposal, wastewater treatment, and construction and operation of new facilities, combined with the impact of electricity rate increases on consumers, would lead to a net gain in employment.

Effects on employment are not the only basis on which to judge proposed regulations — perhaps not even the most important. The stated purpose of EPA regulations is to protect human health and the natural environment. EPA and independent researchers have identified many health hazards associated with coal ash disposal sites; drinking water from wells near one type of ash disposal facility can create a one in 50 chance of getting cancer from arsenic in the water [PDF]. A biologist has identified $2.3 billion of fish and wildlife losses due to releases of pollutants at 22 coal ash disposal sites. These are the types of issues that should be central to the debate on regulatory proposals.

Strict regulation of coal ash disposal would create a net increase of 28,000 jobs. This conclusion doesn’t, by itself, clinch the argument for such regulation. But it does free us of the unfounded fear of massive job loss, allowing us to evaluate the regulation on its merits.

]]>https://grist.org/coal/2011-10-11-coal-ash-regulation-would-create-28000-jobs/feed/0coal-power-plant-flickr-davipt-180x150.jpgcoal plantWhat’s the real cost of not investing in clean energy?https://grist.org/climate-policy/2011-07-22-whats-the-real-cost-of-not-investing-in-clean-energy/
Fri, 22 Jul 2011 17:00:03 +0000http://www.grist.org/article/2011-07-22-whats-the-real-cost-of-not-investing-in-clean-energy/Climate inaction: Are the long-term costs worth the short-term savings?Your house might not burn down next year. So you could probably save money by cancelling your fire insurance.

That’s a “bargain” that few homeowners would accept.

But it’s the same deal that politicians have accepted for us, when it comes to insurance against climate change. They have rejected sensible investments in efficiency and clean energy, which would reduce carbon emissions, create green jobs, and jumpstart new technologies — because they are too expensive.

While your house might not burn down, your planet is starting to smolder. Extreme weather events are becoming more common, and more expensive: In the first half of 2011, Mississippi River floods cost us between $2 and $4 billion, while the ongoing Texas drought has cost us between $1.5 and $3 billion, according to the National Climatic Data Center. And there’s much worse to come: Climate-related extremes are already forcing millions of people from their homes worldwide; ice sheets and glaciers are melting much faster than expected; the latest research shows we are rapidly heading for summer temperatures at which crop yields in America will start to plummet.

How expensive are these damages? The Bush administration simply ignored the question. The Obama administration, to its credit, took it on — but addressed it with antiquated models, developed long before we understood the urgency of the climate crisis. Using early 1990s economics, they concluded that the damages from carbon emissions are worth a mere $21 per ton of carbon dioxide. If you paid for it at the gas pump (which no one has proposed), that would be just $0.21 per gallon.

But our new research, published this week by the E3 Network, finds that suffering the impacts of climate change could cost us far more than that. Our report finds deep flaws in the U.S. government’s $21 per ton estimate. That inaccurate estimate promotes inaction, with enormously harmful consequences.

Our research incorporates an up-to-date understanding of climate risk and uncertainty, and finds that the true cost of carbon emissions could be almost $900 per ton today, and more than $1,500 by 2050. Granted, these are the high-end of the range of 16 scenarios that we studied. We aren’t sure that the costs will be that high — but we also can’t be sure that climate change won’t be that expensive. It’s the fire insurance problem: You buy insurance because you can’t be sufficiently sure that your house won’t burn down.

How much would it cost to buy climate insurance, to invest in emission reduction? The early stages would cost little or nothing; many energy efficiency measures, and the most cost-effective forms of clean energy, such as wind power in suitable locations, are already competitive with fossil fuels. To control the climate crisis, we’ll need to move beyond those early stages; several research groups have estimated the costs of very ambitious worldwide emission reduction scenarios at $150 to $500 per ton of carbon dioxide by 2050.

That sounds expensive, unless you compare it to the cost of inaction. Of our 16 scenarios, 14 find that the costs of climate damages — the costs we’ll suffer if we do nothing — will be equal to or greater than the costs of ambitious emission reduction. Those 14 scenarios reflect real risks, measuring how badly climate change could turn out — and those risks mean that inaction is the more expensive and shortsighted choice. Financial prudence in Washington requires immediate action on climate change: It requires us to stop paying for climate damages and to start investing in guarding against them.

]]>biohazard-mask-polluter-money-briefcase.jpgGas mask and moneyThink energy efficiency isn’t working? Think againhttps://grist.org/energy-efficiency/2011-04-02-think-energy-efficiency-isnt-working-think-again/
Sat, 02 Apr 2011 23:16:16 +0000http://www.grist.org/article/2011-04-02-think-energy-efficiency-isnt-working-think-again/Imagine a press release with this message: We’re not using more household energy than we used to — and the latest data won’t be available until next year. If you read that, I’m guessing you would join me in yawning and moving on to the next story.

That is what the Energy Information Administration (EIA), the federal agency that tracks our energy usage, just said — but it said it in a confusing way that sounded like a much bigger story, and was almost designed to mislead readers. Jess Zimmerman, writing in Grist, was among those whom they succeeded in misleading. Zimmerman’s article, “How Americans defeated efficiency with consumerism,” says that average household energy use has remained stable even as appliances have become more efficient, because we all have more appliances now.

That’s a plausible story, but it’s not actually what the EIA said. Every four years, the EIA does its Residential Energy Consumption Survey; it just released half of the results for the latest, 2009, survey. We now know how many households used each fuel and owned each type of appliance in 2009. For example, virtually every household uses some amount of electricity, and 49 percent heat with natural gas. The more important half of the results, showing how much of each fuel was used by each type of appliance in 2009, will be released sometime next year.

At the same time, EIA released a very old-news comparison of energy use in 1978 and 2005, the previous survey year. That comparison showed that total — not average — household energy use was roughly unchanged. But during the same years, the U.S. population grew by 33 percent, and the number of households grew by 45 percent (because average household size shrank a bit).

Here’s what that EIA comparison showed about the change in household energy use from 1978 to 2005, when expressed in per capita terms:

Total household energy use per person: down 25 percent.

Space-heating energy use per person: down 54 percent.

Water-heating energy use per person: up 4 percent.

Air-conditioning energy use per person: up 107 percent.

Appliances and electronics energy use per person: up 38 percent.

Space heating and water heating together are a very big part of the picture: 80 percent of all household energy use in 1978, 61 percent in 2005. Air conditioning, though growing rapidly, is much smaller: 3 percent in 1978, 8 percent in 2005. So the fact that space heating went way down and water heating barely changed meant that overall household energy use per person went down, not up.

The question that jumps out of these figures is, how did we achieve such enormous savings in space-heating energy use? Answers include more efficient furnaces and windows, better insulation, some shift of population toward warmer states (which also contributed to the rapid rise of air conditioning), and, perhaps, differences in winter temperatures between those two specific years. It appears that we used about half of the savings in space heating on expanded use of appliances, electronics, and air conditioning — so the overall reduction in energy use was only half as dramatic as the reduction in heating alone.

And remember, this “news” is six years old, referring to energy consumption in 2005. Next year we’ll get to see the corresponding data for 2009. Meanwhile, nothing here proves that energy efficiency is useless, or that it has been defeated by consumerism. If you insulated your home, or replaced your furnace or windows, you were part of a nationwide trend that achieved measurable, important savings in energy use and carbon emissions.

]]>energy-efficiency-iStock_180x150.jpgPopular climate econ model needs major overhaulhttps://grist.org/climate-policy/2011-03-15-popular-climate-econ-model-needs-major-overhaul/
https://grist.org/climate-policy/2011-03-15-popular-climate-econ-model-needs-major-overhaul/#respondWed, 16 Mar 2011 02:58:15 +0000http://www.grist.org/article/2011-03-15-popular-climate-econ-model-needs-major-overhaul/Pay attention to the signs.Photo: WCN 24/7True or false: Risks of a climate catastrophe can be ignored, even as temperatures rise? The economic impact of climate change is no greater than the increased cost of air conditioning in a warmer future? The ideal temperature for agriculture could be 17 degrees C (30 degrees F) above historical levels?

All true, according to the increasingly popular Climate Framework for Uncertainty, Negotiation, and Distribution (FUND) model of climate economics. It is one of three models used by the federal government’s Interagency Working Group to estimate the “social cost of carbon” — that is, the monetary value of the long-term damages done by greenhouse gas emissions. According to FUND, as used by the Working Group, the social cost of carbon is a mere $6 per ton of CO2. That translates into $0.06 per gallon of gasoline. Do you believe that a tax of $0.06 per gallon at the gas pump (and equivalent taxes on other fossil fuels) would solve the climate problem and pay for all future climate damages?

I didn’t believe it, either. But the FUND model is growing in acceptance as a standard for evaluation of climate economics. To explain the model’s apparent dismissal of potential harm, I undertook a study of the inner workings of FUND [PDF] (with the help of an expert in the relevant software language) for E3 Network. Having looked under the hood, I’d say the model needs to be towed back to the shop for a major overhaul.

FUND includes estimates of 15 categories of climate impacts, each calculated separately for 16 regions of the world. Yet most of the climate impacts, as seen by FUND, are too small to matter. Under the U.S. government assumptions (including a 3 percent discount rate), what goes into FUND’s total climate damage estimate of $6 per ton of CO2? It consists of $8 for net increases in cooling and heating costs — those pesky air conditioning bills — minus $6 of net benefits in agriculture, plus $4 in damage costs for everything else.

It’s a little hard to fathom how “everything else” ends up so small. Sea-level rise, storm damages, droughts and floods, human deaths and diseases, extinction of species, forced migration of huge numbers of climate refugees: All that and more is valued at $4 per ton. Just two of those categories, water supply problems and extinction of species, account for $2, with a mere $2 remaining for everything else. Catastrophes — collapse of major ice sheets, accelerated methane releases from tundra or clathrates, collapse of rainforests, drastic changes in ocean currents — are excluded in FUND by definition.

We took a closer look at FUND’s net benefit of climate change in agriculture, and found three major problems. First, there’s a flat-out algebra mistake: FUND comes dangerously close to dividing by zero, which can lead to meaninglessly large calculations (this is scheduled to be fixed in the next version of the FUND software, but it affects the current U.S. government version and all FUND calculations to date).

Third, FUND’s treatment of agriculture is based on very old research, all from 1996 or earlier. Back in those days, estimates of near-term agricultural benefits from warming were common; since then, newer research has steadily reduced those benefit estimates and introduced new ways of approaching the problem. As it turns out, the rise in average temperatures is not as important as the number of days above a temperature threshold, 32 degrees C (90 degrees F) or less for some major crops — and climate change means that those damaging temperature extremes will occur much more often.

Quick fixes for some of the problems in FUND’s agriculture calculations would imply increases in the social cost of carbon of $10 to $16. These ad hoc fixes to the model, however, are no substitute for a thorough overhaul of its damage estimates. Until that overhaul occurs, FUND should be treated as a work in progress, not a definitive evaluation of the economics of climate change. It’s not ready for use in U.S. government estimates of the social cost of carbon, or for other policy-making purposes.

]]>https://grist.org/climate-policy/2011-03-15-popular-climate-econ-model-needs-major-overhaul/feed/0flooding-flickr-wcn247.jpgflood signClimate change and the Southwest water crisis: making a bad situation worsehttps://grist.org/climate-change/2011-03-01-climate-change-and-the-southwest-water-crisis/
https://grist.org/climate-change/2011-03-01-climate-change-and-the-southwest-water-crisis/#respondTue, 01 Mar 2011 22:30:31 +0000http://www.grist.org/article/2011-03-01-climate-change-and-the-southwest-water-crisis/Drought denial’s tougher to pull off than climate denial.Photo: Luke RobinsonWhere and how will climate change first affect large numbers of American voters? Answering that question may be crucial to the global efforts to protect the Earth’s climate. The tsunami of stupidity and science denial that has washed over Washington, D.C., won’t be held back by earnest calculations of long-run risks, or by the potential inundation of remote island nations, or by the news that polar bears and other iconic species are endangered.

While climate change may seem remote, the water crisis in the Southwest is all too immediate. Recent years of drought have reached critical levels, threatening to curtail agriculture and even the normal patterns of urban life throughout the region. Even if today’s climate remained unchanged, water use in Arizona, California, Nevada, New Mexico, and Utah would more than double over the next century, just from population and income growth.

In a recent study, Elizabeth Stanton and I show that the changing climate will make a bad situation worse, increasing the Southwest’s water consumption by an additional one-third of today’s level of use. There is simply no way to get that much water; the region’s rivers and rainfall aren’t going to grow. Ocean desalination is expensive, energy-intensive, and environmentally controversial. Groundwater, which makes up the water deficit today, is bound to run out at some point; it is being used far beyond its recharge rates in California and Arizona, and probably elsewhere as well. There are two different estimates of California’s current groundwater reserves; the state would need three times the more optimistic estimate in order to make it through the next century.

Solving the water crisis will require reductions in water use. Nevada and Utah are the top two states in per capita residential water use today. Extensive conservation and efficiency measures will be needed, reshaping urban water use, improving irrigation methods, and cutting back on the region’s lowest-value crops, which are worth less than the water used to grow them.

It gets much harder to solve the water crisis when it gets hotter: We found that climate change could add as much as $1 trillion to the costs of water scarcity for the five Southwestern states over the next century. As Americans start to experience mounting costs of climate change in this and other areas, spending money to reduce carbon emissions will look like a bargain by comparison.

So here’s a message from planet Earth to our newly elected congressional “leaders.” You’ve made it clear that you’re not planning to protect the climate because of what’s happening to polar bears, or the islands that are sinking beneath the waves, or even because you care about the lives of your great-grandchildren. But you’ve got to take action anyway; controlling climate change is crucial if you want people to have reliable water supplies in the Southwest. This isn’t the only way that you’ll feel the impacts of climate change in years to come — but it could be the first big one.

]]>https://grist.org/climate-change/2011-03-01-climate-change-and-the-southwest-water-crisis/feed/0drought-flickr-lukerobinson.jpgdroughtClimate defeats come from D.C., not Copenhagen and Cancunhttps://grist.org/article/2010-12-15-climate-defeats-come-from-d-c-not-copenhagen-and-cancun/
https://grist.org/article/2010-12-15-climate-defeats-come-from-d-c-not-copenhagen-and-cancun/#respondThu, 16 Dec 2010 04:00:34 +0000http://www.grist.org/article/2010-12-15-climate-defeats-come-from-d-c-not-copenhagen-and-cancun/What should we learn from the dual disappointment of Copenhagen and Cancun? The climate policy war isn’t over, but those who are fighting to cut global emissions haven’t won the last few rounds. The decisive defeat in this latest battle, however, did not occur at an international conference. Rather, it took place in Washington, D.C.

Although the Kyoto Protocol tried to prove otherwise, there isn’t any hope of a meaningful climate agreement without the participation of the United States. With one-fifth of the planet’s emissions and a big share of the global ability to pay for mitigation and adaptation, the world’s surviving superpower has to be on board if negotiations are going to go anywhere. (In an ideal, or even sensible, world, the United States would take the lead on climate protection.)

The enormous advance build-up of expectations for Copenhagen reflected the fact that it would be the first world climate summit after George W. Bush left the White House. It was true that a post-Bush administration was necessary for climate progress; unfortunately, it was not sufficient. In the two years when President Obama and the Democrats were strongest, they were unable to pass even a weak, compromised climate bill. Now the momentum in Washington is shifting back toward science-deniers, who plan to hold more hearings on the possibility that the Intergovernmental Panel on Climate Change and the global scientific consensus are a gigantic fraud.

Thus a fundamental obstacle to a climate agreement emerges from the failure of progressive politics in the United States. The failure resides both in leadership and in public opinion. At the top, Barack Obama won the presidency, the Nobel Peace Prize, and the respect of intellectuals everywhere for his eloquent campaign — but failed to live up to the expectations he had created. The insanely competitive, protracted American electoral process routinely selects leaders — Clinton, Bush, and now Obama — who are much better at campaigning than at governing.

Seen from the bottom, the American public does not view itself as rich and powerful, as it is sometimes portrayed in international negotiations. The growth of inequality and the unraveling of the social safety net have led to increasing economic insecurity, amplified by the current economic crisis. The absence of a labor or social-democratic party, indeed the absence of any progressive interpretation of crisis, insecurity, and inequality, makes the country vulnerable to a parochial, right-wing populism. In areas that depend on mining or burning coal, it has been all too easy to promote the fantasy that environmentalists and big-government liberals want to destroy ordinary people’s livelihoods.

What will it take to make the United States willing to rejoin the world on climate negotiations? We need a response to economic crisis that makes people feel proud and united, not frightened and fragmented; we need progressive Democrats to rediscover the joys of fighting for their beliefs and their constituents, rather than endlessly compromising with intransigence and insanity. It’s a tall order — but we’re working on it.

]]>https://grist.org/article/2010-12-15-climate-defeats-come-from-d-c-not-copenhagen-and-cancun/feed/0capitol-tilted.jpgOpponents of California's AB 32 rail against a law that doesn’t existhttps://grist.org/article/2010-10-28-californias-ab-32-opponents-rail-against-a-law-that-doesnt-exist/
https://grist.org/article/2010-10-28-californias-ab-32-opponents-rail-against-a-law-that-doesnt-exist/#respondFri, 29 Oct 2010 01:31:31 +0000http://www.grist.org/article/2010-10-28-californias-ab-32-opponents-rail-against-a-law-that-doesnt-exist/Prop 23 supporters are unable to see how the economy could survive without smog.Photo: Wes & EliIn this year’s election season, let me tell you what makes me mad as hell. I’m outraged at the idea of a law that would make you pay for home energy-efficiency improvements and a new energy-efficient car — but wouldn’t let you save money on either electricity or gasoline.

Here’s the amazing fact, though: There is no such law. Yet if you’ve been watching the fight to stall or overturn California’s climate law, AB 32, you might very well think there is, because that’s how opponents have presented it.

The real-life AB 32 calls for gradually rising standards for energy efficiency — but you get to keep every penny you save by reducing your energy bills. Thanks to that common-sense feature of AB 32, most analysts figure it’s about a break-even for the state and its households. You’ll spend some money on energy efficiency, and you’ll save some money by using less electricity and gasoline. You’ll come out about even — and you’ll help reduce greenhouse gas emissions and slow down global warming at the same time.

To its opponents, AB 32 looks like a dead loss, making you pay for energy conservation without getting any of its benefits. Where did the idea of the “all costs, no savings” law come from? Last year, lobbyists opposed to AB 32 hired two California State University business professors, Sanjay Varshney and Dennis Tootelian. They wrote about an energy savings law with no savings [PDF], as it might exist in a world quite different from the planet we actually live on. Varshney and Tootelian, who had no experience in this kind of analysis, decided that the benefits of AB 32 — the money you’ll save on your energy bills — were so uncertain that they should be ignored. That is, they estimated the savings to be exactly zero. They imagined that the costs, on the other hand, were enormously large.

In the strange world of Varshney and Tootelian, you’ll spend $2,000 every year on making your home more energy efficient, without ever reducing your energy bills. You’ll buy a car that gets better gas mileage, but you won’t save any money on gasoline. Instead, the mere presence of new, fuel-efficient cars on the road will somehow raise the costs of driving older cars; you’ll average $750 a year in increased gasoline and auto maintenance costs. And with everything else going up, food costs must be going up, too; let’s say you’ll spend, oh, maybe $900 a year more on food, due to the imaginary costs of energy efficiency.

This is the economic “research” that’s quoted as gospel truth by the advocates of Proposition 23, which would suspend AB 32. The numbers that are tossed around by Prop 23 fans, suggesting scary costs to the average household, come straight from Varshney and Tootelian. The Varshney-Tootelian numbers are even bigger for the alleged impacts on small businesses, based on a fact-free, back-of-the-envelope guess about the percentage cost increase caused by AB 32 — compounded by an elementary economic mistake that doubles the supposed losses to the state.

If you enjoy the statistical details behind all of this, take a look at my report to the California attorney general, called “Daydreams of Disaster” [PDF]. As I concluded there, the losses projected by Varshney and Tootelian “would be serious economic impacts — if they were real. They are, however, entirely unreal; they should be viewed merely as daydreams of disaster.”

And that is what makes me, as an economist, angry — the idea that statistical nonsense, unsupported by logic or evidence, is accepted and quoted as if it were solid facts. For those who like dreaming about disasters, there are quite a few movies that can be rented. For those who want to wake up and make sensible, fact-based decisions about California’s future, AB 32 is roughly a break-even proposition, and it is good for the environment besides. Prop 23, which would undo it, has got the numbers backwards.

]]>https://grist.org/article/2010-10-28-californias-ab-32-opponents-rail-against-a-law-that-doesnt-exist/feed/0lasmog.jpgBjorn Lomborg: same skeptic, different dayhttps://grist.org/article/2010-09-23-bjorn-lomborg-same-skeptic-different-day/
https://grist.org/article/2010-09-23-bjorn-lomborg-same-skeptic-different-day/#respondFri, 24 Sep 2010 06:23:52 +0000http://www.grist.org/article/2010-09-23-bjorn-lomborg-same-skeptic-different-day/Bjorn LomborgBjorn Lomborg, the Danish climate skeptic, is back in the news. The headlines say he has changed his position on global warming. According to the Guardian, a leading British newspaper,Lomborg is now calling for an annual investment of $100 billion to “resolve the climate change problem by the end of the century,” in an alleged “U-turn that will give a huge boost to the embattled environmental lobby.”

But the Guardian, and other news outlets worldwide, should not have been so easily misled by this latest salvo in the climate debate. Lomborg now wants to have it both ways, calling climate change real, but not really urgent. In his forthcoming book, the source of his supposed reversal, Lomborg does say that “it is vital to emphasize the consensus on the most important scientific questions” about global warming, and “we have long moved on from any mainstream disagreements about the science of climate change.”

But Lomborg also writes that “drastic carbon cuts would be the poorest way to respond to global warming,” and claims that policy makers have become unwisely “fixated on cutting carbon in the near term as the chief response to global warming.” Arguing against cuts in carbon dioxide emissions, Lomborg’s position for more than a decade, is the opposite of what climate scientists have been urging the world to do in response to climate change.

It’s nice to see that a much-quoted skeptic has given up his attempts to rebut all of modern climate science. But that just means that his core position — don’t cut emissions — now rests on economic errors alone. Lomborg opposes steep CO2 cuts that would keep average global warming below 2 degrees C (3.6 F), a target recommended by many scientists, because, as he writes in the new book, “it would reduce annual world GDP by a staggering amount,” around “$40 trillion in 2100,” which “would be about fifty times [the cost] of the avoided climate damage.”

Both costs and benefits at the end of this century are, of course, unknown at this time. Our best guesses about future economic impacts depend on our assumptions about how the economy will evolve over decades to come. Lomborg assumes that the damages from unchecked climate change would be trivially small, while assuming costs of emission reduction drastically higher than most economists studying the problem.

On the damage side, Lomborg projects that the climate-related losses we could avoid by reducing emissions would be only a fraction of 1 percent of world GDP by 2100. This is completely out of scale with the warnings of serious disruption of our way of life that are emerging from climate science. The Stern Review, a comprehensive analysis in 2006, projected that uncontrolled climate change could causes losses of 5 to 20 percent of world GDP, and the outlook has only grown more ominous since then.

On the cost side, serious long-range economic modeling has often projected the need to spend 1 to 3 percent of world output to stabilize the climate. A few economists have projected much higher costs. Why the big difference?

Over the long run, the cost of protecting the earth’s climate is the cost of creating new technologies and industries that run on renewable energy and avoid carbon emissions. The costs in question include the costs of commercializing solar energy, developing vehicles that run without petroleum, and deploying these industries around the world. That will take real money — but it will also create real jobs, making things that we desperately need.

The question of the long-run costs of controlling climate change comes down to our ability to launch new low-carbon industries. If you assume failure, then the only way to control emissions is to turn off the lights; that’s the implicit assumption in the economic models that Lomborg relies on. If you assume success, then our investment in research, development, and retooling will lead to new ways to keep the lights on, simultaneously creating jobs and protecting the earth.

Suppose that it does cost 1 to 3 percent of GDP to solve the climate problem, as many economic models suggest. Can we afford to give up that much current spending, for the sake of long-run goals? We already do. In both the United States and China, the top two emitters of greenhouse gases, military spending is more than 4 percent of GDP. Many other leading economies spend 2 to 3 percent of GDP on the military. If we can back away from the arms races and the imaginary threats (remember Iraq’s weapons of mass destruction?) that drive our military expenditures, we can spend the money that’s needed to protect against the real threat to our long-run security.

]]>https://grist.org/article/2010-09-23-bjorn-lomborg-same-skeptic-different-day/feed/0BjornLomborg200.jpgThe atrazine emails: Science with an attitude is still sciencehttps://grist.org/article/food-the-atrazine-e-mails-science-with-an-attitude-is-still-science/
https://grist.org/article/food-the-atrazine-e-mails-science-with-an-attitude-is-still-science/#respondFri, 10 Sep 2010 23:09:09 +0000http://www.grist.org/article/food-the-atrazine-e-mails-science-with-an-attitude-is-still-science/Herpetologist and atrazine researcher Tyrone Hayes in a 2002 photo. (Peg Skorpinski/UC Berkeley)The EPA is re-evaluating the safety of atrazine, one of the most widely used pesticides in the United States, and indeed the world. Several groups in the science and farming communities have called for its review over mounting evidence of its environmental and human health hazards, despite the whitewash it received under the Bush administration. The defenders of atrazine claim that it is indispensable in growing corn in the Midwest; I’ve written about the economics of an atrazine ban here.

In the debate surrounding atrazine — Syngenta, the manufacturer, insists it is safe, despite more and more research to the contrary — a new controversy has appeared.

Syngenta has accused a leading atrazine researcher, UC Berkeley integrative biology professor Tyrone Hayes, of sending obscene and harassing emails to its staff. Hayes says he was responding to personal threats from individual staff members at Syngenta, and asserts his right to communicate in an often rhyming, rap-style voice as part of his culture.

The most important thing about this controversy is what it’s not about. If Syngenta had solid proof that Hayes’ research on atrazine was flawed, it wouldn’t need to talk about his emails. Hayes is well-known for proving, repeatedly, that atrazine is a powerful endocrine disrupter; even minute doses can turn male frogs into hermaphrodites. And, he says, frogs have the same reproductive hormones as humans: atrazine, at incredibly low concentrations, catalyzes the conversion of testosterone into estrogen in male frogs.

Anyone who can disprove that, step right up and tell us about it. That’s a question of scientific method — and that’s the question we should be talking about, in determining the safety of atrazine.

Hayes worked for Syngenta from 1997 to 2000, until the company refused to let him publish research it had funded, because he found atrazine was hazardous, not safe. He says company representatives have been following him, interrupting his speeches, and trying to discredit him ever since. On the occasions when I’ve heard him speak in public, they certainly didn’t want to leave him alone.

Now Syngenta has released a long collection of Hayes’ emails to its staff. Some of them are rude, obscene, and offensive. I wouldn’t want to receive them; I wish he hadn’t written them. But there are two separate questions about his behavior. First, when someone behaves offensively, do we immediately excommunicate them from all public dialogue, or do we weigh the offense against other things they’ve said, and continue listening to them? Second, does offensive behavior by a scientist discredit his scientific research?

Notice that ex-Senator Alan Simpson, who enjoys a generous public pension, is able to be obscenely sarcastic about everyone else’s dependence on Social Security, and to be gratuitously, viciously sexist in response to a woman activist he disagrees with — and retain his position as co-chair of an important White House panel. A commentator on NPR explained that official Washington has learned to ignore these outbursts from Simpson, because they value his long history of other contributions.

So that answers my first question: apparently you don’t get thrown under the bus until we evaluate your other contributions. In that case, let’s consider some other excerpts from Hayes’ emails to Syngenta, in which he is pouring out his heart about the experience of entering the very white world of academia:

My father used to say, “I just pray to G*d that none of my boys ever go to prison and that at least one of my boys graduates high school.”

I have never seen the inside of a prison. I graduated high school in 1985. I was then accepted on full scholarship to Harvard … In my major, I finished summa cum laude. I then completed a doctorate [at Berkeley] in 3.5 years. I was then hired, and … by age 35 [I became] the youngest full professor … ever … in the history of the university. I honored my father (who never finished high school, whose father never went to high school).

My children have attended the fancy “white private schools” that were not available to me. My son, now turning 15, is a lineman on the football team, plays two instruments in the high school marching band, is a straight A student in the advanced honors program … My daughter, now 12, is also a straight A student, plays drums, piano, is the regional gymnastics champion … I wouldn’t say that my children are better than me … that would be an insult to my father … but you know what I mean.

When I went to college, my father reported an annual income of $9,000 … I get paid $10,000 for talking for an hour … I think about that big six bedroom, three bath “white-folk” house that I bought my parents …

Me? … I am nobody from nowhere … I took the hood to Harvard and brought Harvard back to the hood … do you know what the little ones say about me when I go back for Christmas … “We saw you on tv! We learned about you in school! Can I be a scientist too?”

Do you know how many of the students in my lab were from ‘round the way? (homeless, on drugs, single parents, family members of gangbangers, etc) but found their way to me and have now graduated, gone on to grad school and med school?

My second question, though, is the more important one. None of this really matters for EPA’s evaluation of atrazine. Hayes isn’t wrong about atrazine because he is sometimes obscene and offensive. And he isn’t right about atrazine because he sometimes writes eloquently about his family and his transition from “the hood” to the university.

No, the only question that matters for the atrazine debate is whether Hayes is right or wrong about his research.

Science with an attitude is still science. Its validity doesn’t depend on whether you like the behavior of an individual scientist. Those who are attacking Hayes most loudly on other grounds might be feeling insecure about their ability to challenge him on scientific grounds. I’m not a biologist, but I’m impressed by what I’ve read of his scientific work. I’m still waiting to read something equally impressive from his critics.

]]>https://grist.org/article/food-the-atrazine-e-mails-science-with-an-attitude-is-still-science/feed/0hayes-frog2002_463.jpgA climate policy for people and the environmenthttps://grist.org/article/2010-08-16-a-climate-policy-for-people-and-the-environment/
https://grist.org/article/2010-08-16-a-climate-policy-for-people-and-the-environment/#respondTue, 17 Aug 2010 03:52:27 +0000http://www.grist.org/article/2010-08-16-a-climate-policy-for-people-and-the-environment/With a good climate policy, we could save money and our environment.

Congress is off for its summer vacation, and once again, they left the Capitol without adopting a climate policy. Is it impossible to pass a bill that’s good for both the earth’s climate and the American taxpayer? Or did Congress just drop the ball again?

The good news: A well-designed climate policy could slash greenhouse-gas emissions while putting money in the pockets of most Americans. The bad news: That’s not the policy Congress has been debating.

What would it look like to do climate policy the right way? In a recent study [PDF] released by Economists for Equity and Environment (E3 Network), we explored the impacts on emissions, and the costs to households throughout the country, under a wide range of scenarios. We found two basic principles for designing a fair, effective climate policy: We need to put a price on carbon dioxide emissions, and we need to use the resulting revenues wisely.

Start with the price: To reach the widely discussed goal of a 20 percent reduction in greenhouse-gas emissions by 2020, the price of emitting a ton of carbon dioxide in that year should be $75. That’s definitely higher than Congress has been contemplating.

How could anyone afford that? It’s simple. If most of the carbon revenues are refunded to households on an equal per capita basis, then a large majority of Americans will come out ahead. That is, your refund will be larger than the amount you pay for carbon emissions. If 85 percent of carbon revenues are refunded to households, then four-fifths of the country, including a majority in every state, will be better off. That’s a bigger refund than Congress has yet considered.

Under such a policy, you’d pay a lot for carbon emissions, at the gas pump and on your electric bill ­– but you’d get it all back, and more, in your refund check. You would come out even farther ahead if you save energy, whether by turning off unneeded lights or by buying a more fuel-efficient car. Then you’d pay less but still get the same refund. That’s the point of the plan: the market incentive to reduce emissions.

Now for the not-so-good news: How does this differ from the ever-changing proposals emerging from Washington? Let’s look at three basic questions.

First, is the price on carbon emissions high enough to really reduce emissions? The risks of climate change are real; the laws of physics don’t need 60 votes in the U.S. Senate to make the world grow dangerously warmer.

Reducing emissions is an urgent worldwide priority, but until the largest, richest economy (that would be us) takes the lead, the rest of the world is unlikely to follow.

On this score, all recent legislative proposals have been disappointing. They have ceilings on the price of emissions, typically limiting it to $40 per ton or less in 2020 ­– roughly half of what’s needed to reach the targeted 20 percent reduction.

Next, who gets the money ­– or the permits to emit carbon dioxide, which are worth a lot of money? If emission permits are given away to industry, it’s businesses and their stockholders that reap the benefit. If all permits are sold, then the revenues can be refunded to households, as we propose. One recent proposal, the Cantwell-Collins bill, comes closest to our suggested approach, selling all permits and refunding 75 percent of revenues to households. Other leading proposals include large permit giveaways, wait decades to give refunds to most citizens, and divide revenues among many competing uses ­– some worthy, others pure pork.

The third question is, what else would the policy do to reduce emissions and help build a new, green economy? Investments in energy efficiency and renewable energy can reduce emissions, in concert with price incentives.

These investments should be targeted to the states with the highest per capita emissions ­– generally those most dependent on coal for electricity generation. Reducing America’s reliance on coal is essential to the creation of a new, sustainable energy system. On this point the legislative proposals are more mixed; none seek to phase out coal, but most do invest in efficiency and renewables. Under our plan, 15 percent of revenues remain available after the refunds, and we recommend spending much of this money to reduce emissions and create jobs, especially in the highest-emission states.

If Congress adopts a fair, effective policy when it returns in September ­– one with the right answers to these three questions ­– we can do our part to fight climate change, put money in the pockets of most Americans, and start building a green economy.

]]>https://grist.org/article/2010-08-16-a-climate-policy-for-people-and-the-environment/feed/0money_tree_biodiversity.jpgWhat would happen if we admitted to the high risk of deepwater drilling?https://grist.org/article/2010-06-28-what-if-we-admitted-risk-of-deepwater-drilling/
https://grist.org/article/2010-06-28-what-if-we-admitted-risk-of-deepwater-drilling/#respondTue, 29 Jun 2010 02:01:21 +0000http://www.grist.org/article/2010-06-28-what-if-we-admitted-risk-of-deepwater-drilling/Was the Obama administration “arbitrary and capricious” in imposing a six-month moratorium on deepwater oil drilling? U.S. District Judge Martin Feldman thought so. His June 22 order reversed the moratorium, citing the “immeasurable harm” to “the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country.” By immeasurable harm to the Gulf region, he meant the loss of oil industry jobs, not the loss of oil-free water and beaches.

How could anyone be opposed to a time-out to figure out what went wrong in the Gulf of Mexico? Others close to the industry can see the risk: According to Moody’s Investor Service, insurance rates for offshore drilling rigs have increased by 15 to 25 percent for shallow water rigs, and up to 50 percent for deepwater rigs, since the Deepwater Horizon disaster.

It’s difficult to take low-probability, high-risk events seriously — especially when there are short-term rewards for closing your eyes to them, until they happen. This is an immense stumbling block in the climate policy debate, which often involves extreme risks that haven’t happened yet. But the current oil disaster involves risks that have happened — and are still declared less important than making money as usual.

Consider one worst-case scenario: An offshore well has a blowout, causing an explosion that destroys the drilling rig, which capsizes and sinks. The blowout preventer, designed as the final fail-safe protection for emergencies such as this, is unable to stop the oil gushing out of the well. A “junk shot,” attempting to plug the well with debris, also fails.

When this happened in 1979, at the Ixtoc well off the coast of Mexico, the oil industry might have been surprised. It should have been a good bit less surprising when it happened again in 2010. Interestingly, the first relief well drilled at Ixtoc also failed; that spill went on for more than nine months, pouring more than 3 billion barrels of oil into the Caribbean.

Running out of low-risk resources

As I’ve written before, the world is not running out of oil — but it is running out of low-risk, conventional energy resources. This means that the price of energy has everything to do with the way that we understand and manage risk. If we ignore or deny the risk, and assume that the government (i.e., the taxpaying public) will pay for any catastrophic losses, then industry can keep the price relatively low, at least in the times between disasters. Thus Judge Feldman mocked the idea that problems with one oil well could imply anything about safety at another well: “If some drilling equipment parts are flawed, is it rational to say all are?”

BP, in fact, must have assumed that an Ixtoc-style failure was impossible today. Its 2009 spill response plan for the Gulf of Mexico looks like hastily assembled, unedited boilerplate: Among other obvious errors, it suggests contacting an expert who died in 2005, and mentions impacts on walruses, sea lions, otters, and seals, none of which are found in or near the Gulf region. Even since the Deepwater Horizon blowout, BP has continued drilling another well — this time in walrus country, in the Beaufort Sea, off the north coast of Alaska — using an untested new technique which, according to some experts, could increase the risk of gas explosions. BP executives must be aware that another uncontrollable blowout would be the end of the company, so they must still be certain that accidents never happen.

Incredibly enough, according to an in-depth New York Times report, the risks of failure of blowout preventers were well-known to the industry, and to the feckless Minerals Management Service which was, in theory, regulating oil drilling. In 11 deepwater blowouts since 1980, the blowout preventer worked only six times; that’s a 45-percent failure rate. Yet even as the industry began to build new drilling rigs with better blowout preventers, they continued using older ones such as the Deepwater Horizon. The reason was that it would be so expensive to take a drilling rig out of service for major repairs, costing an estimated $700 per minute of lost production.

At that rate, the cost of the accident to BP so far, including the $20 billion it has agreed to pay for damages to the Gulf region and perhaps another $1 billion of its own costs, looks like 30 million minutes of lost production — or 57 years’ worth. If they could have installed a better blowout preventer in less than 57 years of repair work on the Deepwater Horizon, they would have come out ahead. On the other hand, if catastrophic accidents are as unlikely as walruses showing up in the Gulf of Mexico, why waste money on needless safety precautions?

Energy policy with our eyes open

What would happen if we admitted the level of risk that is involved? During the deepwater drilling moratorium, we would find it was worthwhile to insist on state-of-the-art blowout preventers and other safety devices on all drilling rigs, new or old. Repairs at a cost of only $700 a minute are a bargain, considering the alternative. Perhaps some excessively deep or otherwise risky locations (in the path of hurricanes, for instance) would be declared off limits altogether.

This would lead to less oil production, and higher prices. Indeed, even the increased insurance premiums may be enough to shut down some marginal drilling projects; business analysts have complained that this will be particularly hard on smaller companies. That sounds like good news: Companies too small to do the job safely have no business being involved in something as risky as offshore drilling.

Would the costs of safe oil drilling be high enough to get Americans to buy sensibly small, fuel-efficient cars, and to support public transportation? We’d all be better off in more than one way, if that were the result.

The era of cheap, safe oil is over. We used it up, not wisely, but too well. It’s time to invent an energy system that protects us, and the walruses, and the global climate.

]]>https://grist.org/article/2010-06-28-what-if-we-admitted-risk-of-deepwater-drilling/feed/0bp_oil_spill_gulf_us_coast_guard.jpgWhat is the social cost of carbon?https://grist.org/article/2010-04-23-what-is-the-social-cost-of-carbon/
https://grist.org/article/2010-04-23-what-is-the-social-cost-of-carbon/#commentsSat, 24 Apr 2010 00:55:53 +0000http://www.grist.org/article/2010-04-23-what-is-the-social-cost-of-carbon/The social cost of carbon may be the most important number you’ve never heard of. U.S. climate legislation is stalled in Congress, but in the meantime, the Obama administration is trying to fill the gap by considering climate impacts in the regulatory process: from the tailpipe emissions limits and gas mileage standards unveiled April 1, to energy-efficiency standards for many types of residential appliances and commercial equipment.

This is important work; U.S. action to reduce greenhouse-gas emissions is long overdue, and it’s crucial in the global picture, both because of our large share of total emissions, and because of our ability to influence other nations. But it’s also important to do this right, and a look at how the administration has handled the social cost of carbon (SCC) raises some serious concerns.

The SCC is the estimated price of the damages caused by each ton of carbon dioxide (CO2) released into the atmosphere. In cost-benefit analysis of government regulations, it’s a sort of volume dial: The higher the SCC, the more stringent the standards — if it’s $5, say, only regulations that cost less than $5 to implement would be deemed worthwhile; if it’s $500, the demands imposed on polluters could be correspondingly greater. (With no price on carbon emissions at all, of course, the effective price is $0, and no reductions are “worthwhile.”)

So far, the administration’s interagency working group that has been studying the SCC has come up with a range of values, with a “central” estimate of $21 per ton of CO2 in 2010, or roughly 20 cents per gallon of gasoline. Over time, the SCC would rise, but only to $45 per ton (in 2007 dollars) by 2050. That’s far lower than the projected cost of many substantive mitigation measures, and if widely adopted, it could result in ineffectual regulations that would barely reduce U.S. emissions, if at all.

Even worse, the $21 SCC could easily find its way into discussions in Congress, and be taken as the recommended level for a carbon tax or permit price. If that happens, there is no way the United States could reach the widely discussed, science-based goal of cutting emissions by 80 percent by 2050, which would require a much higher price on carbon. Given how cost-benefit analyses dominate U.S. policymaking, a $21 SCC could have a devastating impact on environmental legislation.

But this doesn’t need to be the last word. In fact, it absolutely shouldn’t be, because the analysis that led to that number is based on deeply flawed economics, omissions, and poor value judgments. We’re not alone in pointing this out: The Environmental Defense Fund, the Natural Resources Defense Council, the Pew Center, the Sierra Club, the Union of Concerned Scientists, and others raised many of the same points we’ve made in formal comments to the Environmental Protection Agency as part of its tailpipe emissions standards review.

What’s wrong with the analysis behind the $21 SCC? For starters, it relies on an overly narrow review of climate economics, relying on a handpicked set of models — FUND, PAGE, and DICE — that happen to produce very low SCC estimates. All three models have serious problems: FUND mistakenly predicts a huge reduction in mortality due to the early stages of climate change, then values the lives allegedly saved on the basis of their per capita incomes. PAGE, in its default mode, assumes that developed nations will adapt to climate change at near-zero cost (it offers a wide range of alternate estimates, the higher of which the working group ignored). DICE assumes on very thin evidence that most people in the world would prefer, and would be willing to pay for, a warmer climate, and recommends a very slow “climate policy ramp” as a result.

We also found that the working group was aggressive in “discounting” the value of future costs, considering rates of 2.5 to 5 percent per year that trivialize future damages, suggesting it is worth spending very little to protect the environment our descendants will inherit. And the estimates fail to consider unmonetizable costs — from the true value of human lives, to the value of our ecosystems.

A last and very serious concern is that the SCC calculations don’t take into account the small but hugely important risk of catastrophic climate damage. As climate scientists refine their models, they are finding that a significant degree of uncertainty in their predictions is inescapable, and disastrous worst-case scenarios cannot be ruled out. Responding to the average projected damages — as measured by the SCC — may be less important than doing whatever it takes to eliminate the risk of catastrophe. Policy designed from this perspective would not rely on cost-benefit calculations, but rather would set a “safe” minimum standard, based on the scientific analysis of potential risks, and determine the least-cost strategies to meet it. The “cost” of carbon would equal the cost of those strategies.

There are too many open questions in the SCC calculation to recommend a precise alternate value based on the information now available; there is a need for more extensive research, examining the full range of available studies of climate damages and costs, and analyzing assumptions about the risks and magnitudes of potential climate catastrophes. In the United Kingdom, where carbon pricing and cost calculations have a longer, better-researched history, the latest estimate is a range of $41 to $124 per ton of CO2, with a central case of $83. We believe an expanded calculation of carbon prices for the United States should at least explore prices in this range, and should consider the policy options that such prices would open up.

]]>https://grist.org/article/2010-04-23-what-is-the-social-cost-of-carbon/feed/29The economics of 350https://grist.org/article/the-economics-of-350/
https://grist.org/article/the-economics-of-350/#respondWed, 07 Oct 2009 02:02:42 +0000http://www.grist.org/article/the-economics-of-350/There is good news on the climate policy front. The Europeans have ratcheted down their emission targets; the Chinese are getting serious about solar power and energy efficiency; and Washington, after opening a multi-billion dollar stimulus spicket for clean energy, is lumbering towards a carbon cap.

This is progress-inadequate, but still important progress — towards what many of us used to think we had to do: cut global warming pollution 80 percent by 2050. These cuts would stabilize the thickness of the heat-trapping carbon dioxide blanket surrounding the earth at 450 ppm (parts per million) and, we thought, provide insurance that the global average temperature increase would not exceed 2 degrees Celsius from 1990 levels.

But 450ppm, it turns out, is so 2005.

In the last 4 years, climate scientists, lead by NASA’s James Hansen, have dramatically altered the bar. To avoid global warming catastrophe-collapse of the continental ice-sheets and sea level rise of dozens of feet — many scientists are now telling us we have to get down to 350 ppm, and quickly.

And so, what four years ago was a heroic target of 450 ppm has suddenly become a mind-boggling target of 350 ppm. Instead of global emissions cuts of 80 percent from 1990 levels by 2050, 350 requires 97 percent reductions: a complete conversion to renewable energy systems by mid-century, with the world economy virtually free of carbon emissions. This is a far more demanding goal than any of the leading policy proposals under discussion today.

Game over?

No. Just time to adjust our thinking about what is possible.

We, along with four other authors, recently completed a report [PDF] for Economics for Equity and the Environment Network (E3), surveying the economic studies informed by recent science. The report found that quicker action aimed at more ambitious targets makes good economic sense. The report outlines what it will take to achieve 350 and finds that a comprehensive global strategy is still well-within the range of what most reasonable people are willing to pay today to avoid far greater damages from climate change down the road. With likely investments of about 1-3 percent of global GDP, we could rewire the planet with clean energy, rebuild global forests to trap billions of tons of carbon, create jobs, and stabilize the climate. And depending on factors such as the price of oil, these investments might actually save us money.

The bad news on the climate front is NOT that the costs of preventing climate change are becoming too expensive. Estimates of the costs have remained relatively stable, while estimates of the likely costs of inaction are becoming unbearable. Whether the final number is 450 or 350, we face no insoluble technical or economic challenges. This is still a problem we can afford to solve. Stopping global warming remains fundamentally a problem of political will.

Why 350?

At the Rio Earth Summit in 1990, the international community agreed to work to prevent “dangerous anthropogenic interference” with the global climate. This statement solidified into a goal of holding further warming to no more than 2 degrees C (3.6 degrees F) above 1990 levels; operationally, this suggested that we needed to stabilize CO2 concentrations in the atmosphere at below 450 ppm.

So for the past few years, 450 has been the number. And it is a daunting one: at current rates of emissions, we will blow past 450 ppm in less than 30 years. Stabilizing at 450 ppm requires rich countries to immediately cap carbon and begin steep cuts. By 2025, the 450 ppm goal means that emissions have to be falling across the entire planet. Yet now, in 2009, governments and businesses are just beginning to come to grips with 450. In the developed world, the architecture for a multi-decadal cap-and-cut system is emerging, and in China there is a growing commitment to clean energy technology, and an inching towards the acceptance of carbon cuts.

But now the scientists have stepped back in.

Even if we achieve 450 ppm CO2, according to the Stern Review, we still face a 70 percent chance that the globe will heat up more than 2.4 degrees C. The last time the earth was that hot sea levels were 75 feet higher.

On top of this, increasing evidence suggests that the earth’s climate system is much more sensitive to the build-up of C02 than conventional wisdom would have it. Initial warming appears more and more likely to trigger processes that will lead to additional warming: methane released from thawing tundra and drying arctic wetlands; carbon emitted from burning forests and drying soils.

Given this new evidence, Hansen and others have argued that to avoid triggering the collapse of the ice-sheets, and eventual flooding of the great coastal cities of the world, we have to hold warming to less than 2 degrees C.

And so, in the year 2007, the new number arrived: 350.

Is 350 Possible?

Hansen (Figure 1) described a detailed scenario for reducing greenhouse gas emissions with the goal of reaching 350 ppm CO2 by 2100. It included phasing out coal completely (or achieving 100% carbon capture) by 2030, along with a combination of large-scale reforestation, avoided deforestation and carbon capture and storage to withdraw huge quantities of CO2 from the atmosphere. To reach the 350 target by 2100, the world would have to quickly go beyond reductions to achieve net negative emissions-removing more greenhouse gases from the atmosphere than are emitted each year.

Our report for the E3 Network contrasts Hansen’s scenario with a less demanding but still quite ambitious trajectory which does not require the world to achieve negative net emissions. In this scenario, the world reaches 350 ppm CO2 by 2200. Emissions are reduced to 54 percent of 1990 emissions by 2020 and 3 percent by 2050, and then zero out, but do not go negative.

The bottom-line on the technical side: Decarbonizing by 2050 is possible with, roughly, the suite of technologies now available or on the near-term horizon. Very aggressive policy, however, will still be required very soon to drive down the costs of renewables, to redesign cities, reimagine transport and agricultural systems, and insure that all efficiencies are captured. Doing all this gets the world to 350 by 2200. Taking the additional steps to achieve negative emissions (and 350 by 2100) would require the development of large-scale, cost-effective sequestration technologies that go well beyond reforestation.

What will it cost to get to 350? Business lobbies have argued that even the moderate reductions called for in recent U.S. legislation would cripple the economy. In fact, there is a large body of research projecting that recent U.S. legislative proposals would have very little economic impact, and that the much more ambitious emission reductions required to reach 450 and 350 ppm respectively, will have moderate net costs.

At least four research groups have modeled global scenarios that lead to 350 ppm CO2. One finds that in a world with unemployed labor and other resources, the stimulus from new climate investments might accelerate economic growth. The other three groups find net annual costs that are generally between 1 percent and 3 percent of world output. These studies are consistent with the Stern Review, the reports by McKinsey, and others, suggesting that achieving 450 ppm would cost around 1 percent or less of global GDP.

Both of these targets, 350 or 450, become a lot cheaper if oil prices return soon to $150 a barrel. If peak oil drives prices that high in the coming decade, then decarbonizing at a pace to hit 350 could lead to economic gains.

At first glance, 1-3 percent of global output may seem too high a price to pay, but if examined in its proper context, the initial sticker shock fades. Suppose, for instance, that the cost of climate protection turns out to be 2.5 percent of global GDP. In an economy like the U.S. that is growing at 2.5 percent per year, spending 2.5 percent of GDP on climate protection each year would be equivalent to skipping one year’s growth, and then resuming. Put another way, if climate policy is at the high end in terms of cost, Americans in 2050 would have to wait one additional year, until 2051, to be as rich as they otherwise would have been had they not been steadily investing in the transition to clean energy.

Or consider another comparison. Military spending is greater than 4 percent of GDP in both the United States and China. On the strength of a different narrative about potential future dangers, both countries are already diverting from annual consumption, year after year, more than the high end estimates of what it would take to stop global warming.

350 and the Bottom Line

Dropping the global climate target from 450 ppm to 350 ppm of atmospheric CO2 may appear to present an impossible task. In fact, it leaves us with qualitatively the same challenge. Achieving 350 simply requires accelerating a global technology revolution that will yield many benefits — in terms of climate stability, energy security, and economic payback. And estimates of the scale of the investment needed to complete that revolution — and complete it on time — are affordable.

Our report for E3 Network is notable for what it didn’t find. There are no reasonable studies that say that a 350 ppm stabilization target will destroy the economy; there are no studies that claim that it is desirable to wait before taking action on climate protection. On the contrary, there is strong, widespread endorsement for policies to promote energy conservation, development of new energy technologies, and price incentives and policies that will redirect the world economy onto a low-carbon path to sustainability.

The constraints on allowable CO2 emissions, for stabilization at a level as low as 350 ppm, are painfully tight. A realistic policy scenario, therefore, demands not only maximum progress in pursuing energy efficiency and promoting renewable energy, but also for measures that remove carbon from the atmosphere. Many of the technologies that will be needed for large-scale sequestration do not yet exist in mass-produced, commercially available forms, if at all.

What are the limits to what we can achieve through energy efficiency, solar power, carbon capture and storage, and other new technologies? This is a question about an unknowable future: a century ago, just before the outbreak of World War I, who could have anticipated mobile phones, laptop computers, and the internet? It is, however, clear that the pace of the clean energy revolution will determine whether we hit a concentration target of 350, 450, or fail to do so. It is also clear that failure to stop global warming will impose very high costs on our children and grandchildren. The world is taking important initial steps toward addressing the climate crisis, with increasingly widespread acceptance of the need to avoid 2 degrees C of warming, and a carbon target of 450 ppm. It now appears that avoiding dangerous climate change will require us to do better than that. The best available estimates suggest that we can, indeed, afford the economics of 350. What we cannot afford is too little climate policy, too late.